Junk Bonds Chart, JNK, SJB Update
JNK is "the SPDR Barclays High Yield Bond ETF tracks a market-weighted index of highly liquid, high-yield U.S. dollar-denominated corporate bonds."
In the chart above, we see that JNK is up against a long-term downtrend (in black) and it looks like it'll collapse once the current uptrend (in red) is broken.
SJB is "the ProShares Short High Yield ETF provides inverse exposure, reset daily, to a modified market-value-weighted index comprising US-dollar-denominated corporate high-yield bonds with maturities between 3 and 15 years."
Earlier this month we noted that SJB had broken a 7-month downtrend at that we had entered a long position in SJB (effectively shorting junk bonds).
In the chart below, we see what could be support for SJB (in black) and the former downtrend likely broken (in green):
Typically a chart like this one resolves upward, and for us it's not a question of "if" junk bonds will collapse and SJB skyrocket. As for when that'll happen, it's anyone's guess but to us the current setup in equities, in bonds (see recent TBT chart and commentary within the previous link) and in junk bonds looks very good.
We remain long TBT and SJB as previously diarized, in order to effectively short bonds and junk bonds, with no stop levels in mind as of yet. We'd be more likely to add considerably rather than sell at a loss if these drop materially.
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